ASSESSMENT OF CREDIT RISK MANAGEMENT PRACTICES IN DASHEN BANK S.C

Abstract

Credit risk management has become an important topic for financial institutes, especially since the business sector of financial services is related to conditions of uncertainty. The turmoil of the financial industry emphasizes the importance of effective risk management practices. The main objective of this study is to assess the practice of credit risk management in Dashen Bank S.C. In this light, the study in its first section gives a background to the study and the second part is a detailed literature review on banking and credit risk management. Descriptive type of research design is employed under the qualitative and quantitative research design survey methodology. The data were collected from Dashen Bank S.C credit risk management office workers by distributing the questionnaires to the respective participants, conducting interview and reviewing the related secondary. The primary data were collected from all 190 employees who are working in credit area in Dashen Bank and 30 randomly selected frequent credit customers. Analysis of primary data were made using descriptive statistical tools. This leads the researcher to find in the last section that the bank in general doesn’t have an effective and efficient credit risk management practices in an integrated manner with the overall strategy of the bank. So the result of this study showed that, even if the bank is with good credit risk management policies and quality of loan granted, there is somehow certain loan defaulters which in turn leads for credit risk. And from the analysis it was concluded that to become competitive and profitable the bank should improve its management of risks by formulating well defined credit criteria, establishing a process for continuous review of credit risk management strategies and strive match to improve its practices in terms of basic factors which affect the practices of credit risk management for better performances.